Fortinet (NASDAQ:FTNT) reported second-quarter 2026 results that exceeded the high end of its guidance, with billings rising 33% year over year to $2.37 billion and total revenue increasing 26% to $2.05 billion.
Product revenue grew 52% to $773 million, while service revenue rose 14% to $1.27 billion. Chief Financial Officer Christiane Ohlgart said the company’s product performance reflected strong FortiGate unit growth and higher average selling prices as customers shifted toward higher-performing models.
Billings Growth Across Strategic Areas
Fortinet said demand was broad-based across its three strategic pillars. Secure Networking billings increased 34%, Unified SASE billings increased 35%, and AI-driven Security Operations billings rose 25%.
The company cited continued demand for physical infrastructure and attached services, particularly as customers invest in securing AI workloads, operational technology environments, LAN edge deployments and AI data centers. OT billings increased more than 55% during the quarter.
Founder, Chairman and CEO Ken Xie said AI is changing security traffic patterns, particularly through rising machine-to-machine and east-west traffic within enterprises and data centers. He said these trends are increasing customer demand for visibility, control and network-security performance.
Xie introduced the term “SASE firewall” to describe Fortinet’s combined Secure Networking and Unified SASE approach. He said the company’s products use a single FortiOS operating system, along with its FortiASIC technology and global infrastructure, to support firewall, SD-WAN and SASE capabilities.
Fortinet said its SASE firewall business grew 34% to more than $2 billion in the second quarter. Management said it sees the opportunity as larger than cloud-only SASE offerings because customers can deploy its technology through cloud, hybrid, on-premises and sovereign SASE models.
FortiSASE billings more than doubled year over year, according to Ohlgart. She said adoption within Fortinet’s installed base increased to 90% of large enterprises. The company cited a seven-figure deal with a global pharmaceutical company that selected FortiSASE to secure more than 45,000 users while replacing an incumbent SSE-only provider.
AI, OT and Platform Demand
Management said customer investment in AI infrastructure has become a material demand driver. Ohlgart cited an eight-figure win with a cloud provider offering hosted infrastructure for generative AI workloads. The customer selected Fortinet to secure AI data centers, building on a seven-figure deal won in the first quarter.
Fortinet said the customer selected its offerings for price-performance and scalable, high-throughput security. Ohlgart said the deal was part of a broader pattern of AI data-center wins from organizations expanding their AI infrastructure.
The company also pointed to demand in operational technology security, where it sees critical infrastructure operators facing heightened cyber risks, regulatory requirements and greater integration of IT and OT networks. Fortinet cited a seven-figure contract with a major utility organization for a communications modernization initiative spanning thousands of distributed field locations.
During the question-and-answer session, management said its OT opportunity is supported by long-term investment in ruggedized and on-premises products, as well as regulations such as Europe’s NIS2 framework. Ohlgart said critical infrastructure historically has had less cybersecurity protection because it was not as integrated with IT networks.
Margins, Cash Flow and Capital Returns
Fortinet reported non-GAAP gross margin of 80.9% and GAAP gross margin of 80.2%. Non-GAAP operating margin reached a second-quarter record of 38%, up 490 basis points year over year, while GAAP operating margin was 33.7%.
Non-GAAP earnings per share rose 41% to $0.90, and GAAP earnings per share increased 44% to $0.82. Free cash flow more than tripled from a year earlier to $966 million. Adjusted free cash flow was $996 million, representing a 49% margin.
The company repurchased 1.9 million shares for $146 million in the quarter. Year to date, Fortinet repurchased 12.5 million shares for $973 million, at an average repurchase price of about $78 per share. Remaining authorization stood at approximately $766 million as of the call.
Ohlgart attributed operating leverage to stronger revenue, cost discipline and efficiencies from internal AI initiatives. She said Fortinet has been applying technology and AI across functions, including support operations, to improve processes and business insights.
Raised 2026 Outlook
Fortinet raised its full-year outlook for billings, revenue, service revenue, operating margin and earnings per share. Management said it expects service revenue growth to improve in the second half, supported by product-revenue growth and attached services.
- Third-quarter billings are expected to be $2.25 billion to $2.35 billion, with revenue of $2.01 billion to $2.10 billion.
- Third-quarter non-GAAP operating margin is projected at 35% to 37%, with non-GAAP EPS of $0.83 to $0.87.
- Full-year billings are forecast at $9.35 billion to $9.55 billion, while revenue is expected to be $8.02 billion to $8.18 billion.
- Full-year service revenue is expected to be $5.18 billion to $5.22 billion.
- Fortinet forecast full-year non-GAAP operating margin of 35% to 37% and non-GAAP EPS of $3.41 to $3.47.
Ohlgart said the company has incorporated an approximately high-single-digit effect from price increases into its second-half billings assumptions, though the impact depends on product mix. Xie said Fortinet intends to adjust prices based on component costs while maintaining gross-margin levels.
Management did not provide 2027 guidance, but said it expects AI security, SASE, OT security and regulatory activity to remain durable market themes into next year.
About Fortinet (NASDAQ:FTNT)
Fortinet, Inc (NASDAQ: FTNT) is a multinational cybersecurity company that develops and delivers integrated security solutions for enterprise, service provider and government customers worldwide. Founded in 2000 and headquartered in Sunnyvale, California, the company was co?founded by Ken Xie and Michael Xie. Ken Xie serves as chairman and chief executive officer, and the company operates through a global sales, channel and services organization to support customers across the Americas, EMEA and Asia?Pacific.
Fortinet’s product portfolio centers on network security appliances and software, with its FortiGate next?generation firewalls and the FortiOS operating system forming a core platform.
